1. Economic Outlook November 4, 2009

2. | Economics 2 Table of Contents I.National Economic Overview II.Residential Real Estate Summary III.North Carolina Appendix

3. | Economics 3 National Economic Overview

4. | Economics 4  We believe the recession may have ended in June. The downturn turned into the longest of the post-war period at 19 months, but some signs of stabilization are appearing.  We are beginning to see some small positives in many key indicators mixed in with smaller declines.  The labor market remains the primary concern as job losses have reached 7.2 million and are likely on their way to more than 9 million before the end of the cycle. This would easily exceed every downturn since the aftermath of World War II. The unemployment rate should reach 10 percent later this year.  Level One  Level Two  Level Three  Level Four Highlights The Recession Appears to Have Ended This Summer, but the Recovery Will Likely Be Slow and Agonizing U.S. Economic Overview Wells Fargo U.S. Economic Forecast Source: Federal Reserve Board, U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC

5. | Economics 5  Real “ core ” GDP, or private domestic final sales, line up well with the persistent weakness in the domestic economy more clearly than does GDP. The measure has been negative in the past six quarters, and we expect it to turn sustainably positive next year.  International trade collapsed last year. Imports have fallen dramatically this year, while exports have fallen less.  Businesses have struggled to bring inventories in line with demand. Massive liquidations occurred in the first three quarters of this year. We expect the drawdown process to proceed, albeit more slowly, for several more quarters.  Nominal GDP, a measure of revenue growth for the economy, has already seen the steepest decline since 1958 and will likely turn positive in the second half of this year. Highlights The Domestic Economy Has Been Extremely Weak but Is on Track for a Modest Recovery U.S. Economic Overview Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

6. | Economics 6  Collapsing Labor Market  The torrent of layoffs and job losses is unlikely to abate until next year.  Housing & Home Equity  Housing prices and home equity are still likely headed lower, weighing further on consumer spending and sentiment.  Fiscal Stimulus  A reduction in payroll withholdings provided a lift to take-home pay in the middle of this year.  Consumer Confidence  While confidence is still low, consumer expectations for the future have rebounded off of their lows. NegativePositive Discretionary Consumer Spending Consumer Spending Plunged in the Late 2008 and Early 2009, but the Declines Moderated This Spring Consumer Overview Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

7. | Economics 7  Credit markets began a steady thaw late last year, and progress has continued in recent weeks. The TED spread has moved to a level not seen since the credit crunch began, and is now at a more normal level.  Corporate borrowing has improved as credit spreads have narrowed. Credit is still relatively expensive, and it remains difficult for small businesses and consumers to qualify.  Mortgage rates were pushed sharply lower by the Fed ’ s intervention in the MBS market, reaching historically low levels in April. Thirty-year fixed mortgage rates have remained around 5 percent since then. Highlights Fed and Treasury Actions Have Helped Narrow Credit Spreads Credit Spreads & The Yield Curve Source: British Bankers’ Association, Federal Reserve Board, Freddie Mac and Wells Fargo Securities, LLC

8. | Economics 8  After declining in 2009, global economic growth is poised to rebound in 2010.  Recovery is already under way in developing nations such as China and Brazil, and there are signs that European recessions are coming to an end. Many western economies, however, will still likely continue to need macroeconomic stimulus.  The dollar should continue to grind higher against most major currencies over the next few quarters as U.S. growth prospects continue to improve. Wells Fargo Bank Currency Strategy Group Forecast Highlights A Tentative Global Recovery Is Starting to Take Hold Global Growth & The Dollar Source: Bloomberg LP, Federal Reserve Board, International Monetary Fund and Wells Fargo Securities, LLC

9. | Economics 9 Unemployment by County Unemployment Rate August 2009 Greater than 12.5% 10.0% to12.5% 8.0% to10.0% 6 to8.0% Less than 6.0% Unemployment Rate Large Portions of the United States Continue to Face Serious Unemployment Issues Source: US Department of Labor and Wells Fargo Securities, LLC

10. | Economics 10 Residential Real Estate Summary

11. | Economics 11  We estimate an overbuild of roughly 2.0 million units occurred at the cycle peak, and, unfortunately, little progress was made in reducing inventories in 2008 despite the collapse in new home construction. Although inventory levels have improved this year, they still remain elevated. This will likely continue to pressure new construction activity and prices.  Housing starts remain at low levels, although they have inched up recently. Starts probably bottomed during the first half of this year, but we are at least two years away from seeing starts move back above 1 million units.  Excess supply from builders and the rising tide of foreclosed properties have driven prices sharply lower. Price declines have moderated in recent months. Progress will likely remain uneven, and we do not expect to see house prices trough until 2010. Wells Fargo Housing Outlook Highlights Construction May Have Bottomed, but This Will Likely Not Be the End of the Problems for Housing Homebuilding Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp, U.S. Department of Commerce and Wells Fargo Securities, LLC

12. | Economics 12  New home sales have improved markedly in recent months. Sales fell sharply last autumn despite lower mortgage rates and increased incentives from builders.  Existing sales have held up better and have also increased recently. A large portion, however, consists of foreclosure and distressed sales. The first-time homebuyers ’ tax credit is likely providing a lift to home sales. The tax credit, however, is due to expire at the end of the year.  The near-term relevance of the housing affordability measure has diminished because prices have been pushed down by foreclosure activity and fewer people can qualify for conventional mortgages.  Although credit standards loosened somewhat in the third quarter, they still remain tight. Continued caution is understandable given the rise in delinquency rates and foreclosures. Highlights While Construction May Have Seen a Trough, We Expect Prices to Continue Declining for Some Time Residential Real Estate Source: Federal Reserve Board, National Association of Realtors, S&P Corp, U.S. Department of Commerce and Wells Fargo Securities, LLC

13. | Economics 13 FHFA (OFHEO) Home Price Index Home Price Declines Will Likely Continue into 2010 Home Price Declines from Peak Source: FHFA and Wells Fargo Securities, LLC

14. | Economics 14 North Carolina

15. | Economics 15  North Carolina ’ s unemployment rate has more than doubled since the start of the recession. Labor force growth has certainly contributed to the rise in the unemployment rate, but layoffs have also mounted at an alarming rate. Layoffs are most notable in the construction and manufacturing sectors, which still account for about 20 percent of total employment in the state.  Payroll employment declined more than five percent from its peak in several major metro areas including Charlotte and Greensboro. Recently, however, the declines have been slowing. With such severe job losses, personal income will likely fall this year, hitting the state ’ s retailers and consumer sectors.  New single-family building activity has declined considerably from cycle highs as local and national builders scaled back. Construction likely bottomed earlier this year, and single-family construction activity has inched up recently.  Most of the state did not experience the same rapid home price appreciation during the housing boom as other parts of the country. Home prices declined more than six percent in the second quarter, and we do not expect price appreciation to return for at least another year. Highlights Unemployment and Housing Freeze the Economy North Carolina Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC

16. | Economics 16  Payroll employment declined sharply and the unemployment rate rose following the beginning of last year as layoffs mounted. Recently, however, the declines have slowed.  Charlotte ’ s housing market saw strong growth but was not a bubble market. Nevertheless, excesses need to be worked off. Home prices have declined modestly over the past year and are down a cumulative 11 percent from their peak, as measured by the S&P/Case-Shiller index.  Worries about the region ’ s financial employment base will likely weigh on the housing market in coming quarters.  Single-family construction declined over 80 percent from its peak, reflecting pull backs by national builders and the effects of tighter credit. Single-family construction has inched up over the past few months.  Population growth in 2008 totaled 55,000 in the MSA and close to 70,000 in the broader CSA, which includes emerging suburbs and employment markets in Mooresville, Denver and Lancaster County. Highlights Unemployment Is a Major Concern Charlotte Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC

17. | Economics 17 Charlotte CSA Employment concerns dominate the outlook for Greater Charlotte Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC

18. | Economics 18 Appendix

19. | Economics 19  Monthly Economic Outlook  Weekly Economic & Financial Commentary  Special Reports  Economic Indicators  Global Economic Commentary  Federal Reserve Commentary  Real Estate & Housing  Consumer & Retail  Chief Economist List  To join any of our research distribution lists, please visit our website:  http://www.wachovia.com/economic semail http://www.wachovia.com/economic semail Distribution ListsRecent Special Commentary A Sampling of Our Recent Special, Regional and Industry Commentary Economics Group Publications

20. | Economics 20 Wells Fargo Securities, LLC Economics Group Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wachovia Bank N.A., Wells Fargo Bank N.A, Wells Fargo Advisors, LLC, and Wells Fargo Securities International Limited. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2009 Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE John E. Silvia, Ph.D. Chief Economist Diane Schumaker-Krieg Global Head of Research & Economics  diane.schumaker@wachovia.com diane.schumaker@wachovia.com  john.silvia@wachovia.com john.silvia@wachovia.com Sam Bullard Economist  sam.bullard@wachovia.com sam.bullard@wachovia.com  Desk Operations  Financial Services Anika Khan Economist  anika.khan@wachovia.com anika.khan@wachovia.com  Real Estate  Retail & Automotive Azhar Iqbal Econometrician  azhar.iqbal@wachovia.com azhar.iqbal@wachovia.com  Quantitative Macro- Economic Modeling Adam G. York Economist  adam.york@wachovia.com adam.york@wachovia.com  U.S. Consumer  Real Estate Ed Kashmarek Economist  ed.kashmarek@wellsfargo.com ed.kashmarek@wellsfargo.com  U.S. Macro Economy Tim Quinlan Economic Analyst  tim.quinlan@wachovia.com tim.quinlan@wachovia.com  Global Economies  Business Investment Kim Whelan Economic Analyst  kim.whelan@wachovia.com kim.whelan@wachovia.com  U.S. Macro Economy  Business Investment Yasmine Kamaruddin Economic Analyst  yasmine.kamaruddin@wachovia.com yasmine.kamaruddin@wachovia.com  U.S. Macro Economy Mark Vitner Senior Economist  mark.vitner@wachovia.com mark.vitner@wachovia.com  U.S. Macro Economy  Real Estate Jay H. Bryson, Ph.D. Global Economist  jay.bryson@wachovia.com jay.bryson@wachovia.com  Global Economies  Foreign Exchange Scott Anderson, Ph.D. Senior Economist  scott.a.anderson@wellsfargo.com scott.a.anderson@wellsfargo.com  U.S. Macro Economy Eugenio Aleman, Ph.D. Senior Economist  eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com  U.S. Macro Economy